Thursday, May 29, 2008

.9% Real GDP Growth in QI = NO Recession

WASHINGTON -- The U.S. economy was stronger than first thought because of a better trade balance and stronger business spending.

Gross domestic product rose at a seasonally adjusted 0.9% annual rate January through March, the
Commerce Department said in the second estimate of first-quarter GDP (see chart above). Originally, in a report a month ago, Commerce said GDP increased 0.6% in the first quarter -- the same, rate of growth achieved in the fourth quarter.

Bottom Line: With GDP growth of almost 1% in the first quarter, there is almost 0 probability that the NBER could determine that the U.S. economy was in recession in 2008, at least not during the first quarter.


At 5/29/2008 10:11 AM, Anonymous Anonymous said...

Does NBER have a license or other special designation to be the *only* body that can declare a recession?

Where did NBER's apparent authority come from? The air?

No. The American people have voted with their actions. For most people this is a recession.

At 5/29/2008 11:13 AM, Anonymous Anonymous said...

Recession is coming by third quarter as stock market sector rotation shows along with bond market behavior. It may last for about one year or more this time around.

At 5/29/2008 11:15 AM, Anonymous Anonymous said...

Jeff Frankels, a member of the NBER business cycle dating committee, disagrees.

At 5/29/2008 3:37 PM, Blogger SBVOR said...

With today’s 50% upward first revision to the Q1 GDP data, the likelihood of a recession is fading really, really fast.

It is probable that Q2 will show slower growth than Q1. But the best minds remain convinced Q2 will show positive GDP growth, every quarter of 2008 will show positive growth and 2009 will grow faster than that.

Once we get the final numbers for Q2 (9/26/08), we will be able to safely bury all this media hysteria in the ash pile of a very long, very sad history of media folly.

Fortunately, we’ll be able to bury the 2008 recession myth before the November election. Thus, the political ploy on the part of Dems will have backfired (big-time).

See my latest updates on this sorry media driven hysteria here:
The Recession of 2008 That Wasn’t?

At 5/29/2008 3:39 PM, Anonymous Anonymous said...

No, the American people (some) and the media voted with their emotions. Recession is an economic term, and we have not experienced one.

At 5/29/2008 7:19 PM, Anonymous Anonymous said...

I would point out that in November 2001 -- when the NBER declared the March 2001 economic peak -- GDP for the first quarter was still being reported at +1.2%. It was not revised downward (to a negative number) until mid-2002. The notion that a recession cannot occur with GDP printing in positive territory is simply false. Nor is it true that there must be two consecutive quarters of contraction.

At 5/29/2008 9:27 PM, Anonymous Anonymous said...

A recession is defined as 2 quarters of negative GDP growth.

Redefining the term, recession in order to fit the story you are trying to tell would appear to be intellectually disingenuous.

Either there is negative growth or there isn't. At present, the data do not support the sky-is-falling conclusion.

At 5/30/2008 11:27 AM, Anonymous Anonymous said...

A recession is defined as 2 quarters of negative GDP growth.

Sorry, but not by those who actually do the recession dating.

Fact is that when the NBER declared a recession in their Nov. 2001 announcement, Q1 GDP was running +1.2%. Further, the 2001 recession did not evidence two consecutive quarters of GDP contraction, but the NBER deemed it a recession nonetheless.

At 5/31/2008 3:37 PM, Blogger Unknown said...

Its kind of silly to believe that Americans are going to let the word recession -- is this now a recession or not -- determine how they vote in November. Fact is, 90% of us now believe that this is a recession. Whether the statisticians agree or not, it is what we believe that influence how we vote. Just as we all now collectively believe that inflation is a big and growing concern, even though the magnitude of the inflation that we experience is vastly understated in CPI.

We are well past the point where the government's assurances can override the facts we see with our eyes. Instead, by handing us a turd and calling it liver pate', government has now earned its lowest ratings in two generations.


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